>> coming up come from coverage of the annual libertarian conference freedom fest, economist george gilder talks about the new edition of his 1981 best-selling book, "wealth and poverty." this is just over 30 minutes. >> george gilder, you have the new edition of "wealth and poverty" out. how is the country changed since the original "wealth and poverty" came out in the 1980s click >> it hasn't changed at all. we've got a new carter in office and president obama. most of the themes of "wealth and poverty" that sprung from the awful doldrums of the u.s. economy under jimmy carter apply stronger, more strongly today. >> house so click >> obama is the same kind of antibusiness president and

insight president. same kind of managerial, interfering, strangling, surprising president jimmy carter was. >> you writing here about president obama. i want to get to the right page so i can quote it correctly, sir. you write under the obama administration that the u.s. had a morbid subversion of the infrastructures of its economy. the public sector has become a manipulative forest, aggressively intervening in the venture and financial sectors with guarantees and subventions that attract talent and debunking. >> the worst of this is the korean cast of the obama administration. the epa now has gained control over everything.

see so to have been deemed a pollution, dangerous to the environment in co2 is of course that these plans. they attempt to surprise or two epitomize the anti-nature, enterprise spirit of this administration. the reason we need another supply-side revival of the same kind we had under ronald reagan. >> would you change anything you wrote in the original "wealth and poverty"? >> i would've changed quite a lot. there's all kinds of details that a changed. but i found that to try to change one thing would be to change everything. so you know, you get into the morass of editorial work. so instead of changing an

essentially retained the old look and added 40,000 new words at the beginning and kind and revision of my monetary policy in the middle. it's a new book, but it contains the old book veered >> pennysaver bishop monetary policy, what do you mean by that? >> i failed to make clear in the original version of "wealth and poverty" that i believe can stable currencies. i don't believe including current these. i agree with steve forbes that flow currencies, which is the standard value by which every entrepreneur has to guide and has decisions it's like floating our so that people wouldn't have to work so much. one man could have the power

worth 50 minutes. the next come the 70 minute and needs in-house default swaps and insurance policies. just to guide the economy. one of the things that's happened over the last decade is that we've had a hypertrophy of finance and the reason of the excess and waste so much wealth and the economy is migrated to finance is because the currency is so unstable, that so much money can be made, betting on the ups and downs of our currency against foreign currencies. this is a big danger today. a lot of people attack the chinese for manipulating the currency. but the chinese just want to keep the currency stable.

i saw the chinese want to do. they want to maintain the dollar as a standard of value. it's a saturday botching the currency. the threat to the american dollar does not come in beijing. they defend the dollar. the threat comes from washington and wall street. i make that new arguments in the new edition of "wealth and poverty." >> george gilder come you rate the united states over the last decade has witnessed a classic confrontation between the forces of entrepreneurial capitalism and those of established institutions, claiming a higher virtue, expertise and political standing. once i subsist on unforced for the enterprise. the other on branson told some privileges at the treasury, the federal reserve and the white house. >> that is exactly what we've

had. when michael lewis wrote up a bit short. he is writing about all the jackal of hedge funds and the bed against the big banks were all supporting these subprime mortgages concoctions, confections and scans. it was all the most prestigious forces in both u.s. and the world economy that backed the blindsided by collet, people who are investing in these crazy concocted mortgage securities in which the value was totally unknown by the people investing in a period the people shorting means were hatch funds in venture funds and private equity funds.

all of these are entrepreneurs who are not seeking special government leaders. the big banks, the goldman sachs of the world were all internet government and the government itself is mandating the purchase of these credit defaults on its and other devices which ended up bringing down the economy. it's not procapitalist to support goldman sachs and the internment embrace of the department of the treasury. >> is supply-side economics is quick >> surprise side economics is true economics. i actually am quite excited to have mitt romney running for president because they & co. was one of the providers of the

foundation of supply-side economics. they apply to business. they showed the most effective way for businesses to gain share -- market share to cut their prices. we will cut prices that their business market share because costs are out by about 20 to 30% with each doubling of total units that were sold. the cost in general, economies of scope and scale of learning is called a learning curve. this is really the foundation of supply-side economics. why when you cut taxes, which are just like a prize, you reduce costs across the economy and allow the united states to expand its global share of the market for enterprise and wealth

and that's why supply-side economics works. it's not merely by balancing the budget for overcoming diet or one of these accounting gimmicks that are often treated as conservative economics. it's opening horizons of the economy to human creativity. creativity always comes as a surprise to us. so you cannot plan it. if you plan it, you wouldn't need it. >> mr. gilder, can mitt romney used the phrase politically supply-side economics quiets >> i think he could. in all, he's surviving the vatican inspiration and that book fair was quoted more --

made me president reagan's most quoted living author. he quoted that book regularly throughout his administration. reagan didn't ounce the budget. actually during the reagan administration, there is a dollars increase in government debt overall. he was winning the cold war. but the private sector increased its assets by some $17 trillion under carter we had pretty much a balance budget and a balanced trade. but the people, the private economy was all in the rad. but really not hers is not just the account. that is bad and ultimately too much to his unfortunate.

but what not hers is not so much the liabilities of the economy. it's the assets. under reagan's supply-side movement, the private assets of the american economy boomed. so the liabilities became less significant. our economy thrives throughout this period. >> george gilder, a lot of fellow travelers turn the supply-side have look at theory. >> a lot of them have become embroiled in the silly analyses of what happened after quick contact states. clinton drastically lowered the capital gains tax and that was where most of the new revenues

came. but in general, 50 nations around the world have reduced their tax rates since wealth and poverty was published. drastically reduce tax rates. most of eastern europe now has flat tax is. in all these countries, revenues have boomed. there hasn't been a big craze this is anime and estonia. this in a past and estonia with 12% flat tax. the fact is supply-side economics is booming around the world. it's only in the united states that soul-searching and from this economics of enterprise. >> what is your analysis of what is happening in what donald rumsfeld recalled old europe?

>> old europe is fallen with the indulgent dilutions of the welfare state. they've all accepted dependence on a show i've government and bass have destroyed the value of their assets. when you destroy the value of your assets, ultimately the human beings who make your economy go our investments and creations of work after. when you'd appreciate this asset, reliability is become impossible. if you unleashed the assets of your economy, allows the stock market to boom and thread began, then all of a sudden these liabilities they seem impossible today become manageable in the

future. >> george gilder, when you see the fight in congress over the debt ceiling or tax breaks are balanced budget, what was she like to see congress do and how important his recent attack feeling? >> that's all just a kind of theater of the absurd. what we need to do his spot in our taxi and deregulate. i tell this story at new zealand, israel, number of countries which have faced crises far exceeding our current predicament. new zealand is one of my favorite is the third richest country in the world in the 1930s. by the 1980s, it is a third

world country. it couldn't even feed itself. 45% of all aquaculture of revenues looking for the government. it essentially was a socialist country. they flatten out over government spending, eliminating all agricultural subsidies. new zealand started not only feeding itself, but became one of the great sources of food around the world and can p. did and dairy products in wisconsin so aggressively that the wisconsin accused them of unfair trading crack this is all the way from new zealand. it's the great vanity of bureaucrat that somehow their jobs are off the import. after the second world war, we

eliminated 100 to 2000 bureaucrats, millions of workers in the same keynesian economist gary thayer declared this would cause a new great depression not do the work, that it would do the worst dislocation in the economy had entered phase. instead, the growth rate doubled. 7 million new jobs were created in him we entered the night 50s, which returned. expand it. it is a mini u.s. economy. this is after a reduction government spending, equivalent to eliminating the entire government today. the same thing happened in new zealand. when i grow you crisis and

drastically retrench government interference in regulation, the economy takes off. everybody is stunned. particularly demand side economists are stunned because they can't understand creativity that comes as a surprise to us and is the heart of capitalist economics. >> george gilder, one of the solutions often disguised as a balanced budget amendment, something you discuss in "wealth and poverty." >> i think a balanced budget amendment is. it's a gimmick. since it's a genetic it can be countermanded by other mandates special regulations. it's almost meaningless, but it gives politicians a sense that they are doing some thing to discuss the problem. they aren't doing anything to address the problem when they

attempt the balanced budget amendment. what we need is not accounting given that. we need to release on the frontiers of the world economy and we need to unleash america's energy entrepreneurs as well. the u.s. can overcome the energy crisis. and a few years, nearly five on my machine technologies that transform petroleum industry in the past five years, the horizontal tracking and other developments that have made it possible with a much smaller surface reached much larger tropes of fuel than in the past.

the green energy sources that consumed the most valuable part of the global environment, which is the surface of the earth, air above all soils on the surface of the earth. you know, you have cells in windmills and biofuels and all of these systems waste what is important, which is the surface it ears, while ignoring the almost infinite tropes of energy below the surface of the earth that can be reached with a very small footprint of usable land. >> what is all true wisdom and how does that fit into the capitalist system? >> all true wisdom is an orientation towards the needs of

others. i believe capitalism is intrinsically altruistic. that is to say that capitalism is based on making investment without any assurance that others will respond to god. capitalist investments only work if they respond imaginatively to the needs of others. that is why think capitalist and is all true state of socialism i believe is intrinsically based on creed, maybe the greed for power. i believe that joe crede beats an invisible hand to an abercorn welfare state because the truly greedy person like goldman sachs goes to washington to get guarantees for his investment

and guaranteed investments that the definition of socialist on. socialism tries to guarantee the worst of things rather than write things. the prep the rates are capitalist rights. she don't have any rate to a guarantee of your actual investments. that is why all these guarantees are so destructive to deliver entrepreneurs the web from creative benefits of capitalism towards glavine government for special privileges at the top. >> how often do you get to washington? >> now and again. i'm not a very frequent visitor in washington. >> what you think of it?

>> i think it is too rich. today, washington and its environments contain all the richest counties in america. does that make sense of the people are supposed to be serving us are in fact growing obese with power and privilege? i think that is the simple of that decadent scene. >> how did you get your start? >> i began when i was a young name. i began writing about sex of all things. i wrote a book in which i came to understand, which is later republished in this imprint as men in marriage. i essentially showed that civilization depends on family life, that it is the ties of

family that ultimately to the teacher. man's connection to the future passes through the what muppet women. this is man and manage them that believe the breakdown of family way back in the early 1970s would lead to a welfare state for the women and children in the police state for the boys because female-headed families are not raising boys. today, we had the welfare state and defend 70 programs taking care of women and children and we have a police state for the boys, a third of young, black

men are in jail or on the land or impregnation. it is a tragedy we've inflicted on the black family. the black family could endure better than bj. but when i started studying poverty, it became evident that she couldn't understand poverty unless you understood wells. after a book called visible man about the welfare's date, i then wrote wealth and poverty and ronald reagan read it. one of the first he wrote me and we were off in the roaring 80s and he wrote the millennial today. >> i define wealth? >> i define wealth as a store of

value. it's a story for a tennis foundation foundation of human creativity. it's really the first of human creativity. this is the first of surprise. my next spoke is called knowledge and power about how i'll enterprise is based on surprise. if you could read it yet, you could plan a and you wouldn't need entrepreneurial surprise. the fact that it's dead, that means that it's dependent on freedom and that's why they're so is obama programs like celinda and all based on controlling in governing the

decisions of entrepreneurs always fails because they are based on the past. they're propping up the past in the name of congress because future will come as a surprise to us. >> in the chapter the nature of poverty, you write the refusal of american leaders to tell the truth is more important when it comes to poverty. the prevailing expressed opinions is racism and discrimination still looks and the low-end kinds of blacks. this proposition is false and insidious. not only does the same to write americans, not only does it obstruct the truth, and encourages states essential incredibility the alternet posted held in private by many blacks and whites that can now -- cannot now make it in america without fast federal

assistance, without indeed the government programs for the worst aspects of black poverty and promised to perpetuate. >> that is under the carter administration. 40% branagh does -- it is below 40%. now it is about 70% of lochhead are born out of wedlock. this is as charles murray shows a weight problem as much a but of them. all the welfare states focused on the inner-city and that is why the problem of poverty is so much worse in the inner-city betrays this is where of these government programs focused their attention. when people become dependent on the state, they become dependent

and lose the ability to launch the surprises of enterprise. we are seeing that in europe today and we are increasingly seeing any night stays. i think this is a pivotal moment and i think the u.s. can return to his entrepreneurial inspiration. the mac so are you making a moral argument? detected at all tourism and capitalism in the birth rate, et cetera. >> i think ultimately, economics as a moral foundation. capitalism is not based on dodgy dog competition. they conduct experiments and expand